Blackrock Lat A Regulatory News (BRLA)

BlackRock Latin American Investment Trust plc

(Legal Entity Identifier: UK9OG5Q0CYUDFGRX4151)

Information disclosed in accordance with Article 5 Transparency Directive, DTR 4.1

Annual Results Announcement for the year ended 31 December 2023

PERFORMANCE RECORD

Sources: BlackRock Investment Management (UK) Limited and Datastream.

Performance figures are calculated in US Dollar terms with dividends reinvested.

1 The change in net assets reflects the portfolio movements during the year and dividends paid.

2 Based on an exchange rate of US$1.27 to £1 at 31 December 2023 and US$1.20 to £1 at 31 December 2022.

3 Alternative Performance Measures, see Glossary contained within the Annual Report and Financial Statements.

4 The Company’s performance benchmark index (the MSCI EM Latin America Index) may be calculated on either a gross or a net return basis. Net return (NR) indices calculate the reinvestment of dividends net of withholding taxes using the tax rates applicable to non-resident institutional investors, and hence give a lower total return than indices where calculations are on a gross basis (which assumes that no withholding tax is suffered). As the Company is subject to withholding tax rates for the majority of countries in which it invests, the NR basis is felt to be the more accurate, appropriate, consistent and fair comparison for the Company.

5 During the year ended 31 December 2022, revenue earned by the Company was enhanced by a number of stock and special dividends, coupled with the effect of the tender offer reducing the number of ordinary shares in issue post May 2022. In order to maintain investment trust status, which requires the distribution of 85% of the Company’s revenue, the Board announced the payment of an additional dividend of 13.00 cents per ordinary share for the financial year to 31 December 2022.

CHAIRMAN’S STATEMENT

Dear Shareholder,

I am pleased to present the Annual Report to shareholders for the year ended 31 December 2023, which has delivered strong absolute returns and as I shall discuss below, provided grounds for optimism in the outlook for Latin American equities.

MARKET OVERVIEW

Latin American markets have significantly outperformed both developed market and the MSCI Emerging Markets indices over the year under review, with the MSCI EM Latin America Index net return of 32.7% in US Dollar terms, compared to a rise in the MSCI Emerging Markets EMEA Index net return of 8.6% in US Dollar terms and an increase in the MSCI World Index net return of 24.4% in US Dollar terms.

PERFORMANCE

Over the year ended 31 December 2023 the Company’s net asset value per share, with dividends reinvested rose by 37.8% in US Dollar terms, which compares to the benchmark returns with dividends reinvested of 32.7%. The share price rose by 35.3% in US Dollar terms (but increased by 27.6% in Sterling terms). The outperformance was driven by good stock selection across a range of markets, most notably driven by stock selection in Mexico, as the country has been and continues to be a key beneficiary from the shifting of global supply chains and coupled with a prudential fiscal policy and a strong export sector, Mexico has replaced China as America’s largest trade partner. The stock selection in Brazil was also a contributing factor to performance, the portfolio was overweight in domestic Brazil, this positioning reflected the Investment Manager’s view that interest rates were excessively high, with their expectation for interest rates to be cut during the year which has seen this increasingly being priced by the market in Brazil which has been a strong contributor to the portfolio’s returns.

GEARING

The Board’s view is that 105% of NAV is the neutral level of gearing over the longer term and that gearing should be used actively in an approximate range of plus or minus 10% around this as measured at the time that gearing is instigated. The Board is pleased to note that over the year the portfolio managers have used gearing actively with a low of 100.3% in May 2023 and a high of 108.9% of NAV in January 2023. Average gearing for the year to 31 December 2023 was 103.1% of NAV.

REVENUE RETURNS AND DIVIDENDS

Total revenue return for the year was 30.45 cents per share (2022: 41.48 cents per share). The decrease of 26.6% was largely due to the reduction in dividends paid by portfolio companies. Under the Company’s dividend policy dividends are calculated and paid quarterly, based on 1.25% of the US Dollar NAV at close of business on the last working day of March, June, September and December respectively.

Information in respect of the payment timetable is set out in the Annual Report and Financial Statements. Dividends will be financed through a combination of available net income in each financial year and revenue and capital reserves. The Company has declared interim dividends totalling 28.82 cents per share in respect of the year ended 31 December 2023 (2022: 38.87 cents per share) as detailed in the table below; this represented a yield of 5.1% based on the Company’s share price at 31 December 2023.

Dividends declared in respect of the year ended 31 December 2023

The dividends paid and declared by the Company in 2023 have been funded from current year revenue and brought forward revenue reserves. As at 31 December 2023, a balance of US$5,876,000 remained in revenue reserves, which is sufficient to cover approximately two and a half quarterly dividend payments at the most recently declared dividend rate of 8.05 cents per share.

Dividends may be funded out of capital reserves to the extent that current year revenue and revenue reserves are insufficient. The current and previous years dividends have been funded from the high levels of income generated by the portfolio companies and revenue reserves. Next year it is anticipated that capital reserves may be utilised to supplement the dividend if there is lower income received from the underlying portfolio companies. The Board believes that this removes pressure from the portfolio managers to seek a higher income yield from the underlying portfolio itself which could detract from total returns. The Board also believes the Company’s dividend policy will enhance demand for the Company’s shares and help to narrow the Company’s discount, whilst maintaining the portfolio’s ability to generate attractive total returns. It is promising to note that since the dividend policy was introduced in 2018, the Company’s discount has narrowed from an average of 13.5% for the two-year period preceding the introduction of the new policy on 13 March 2018 to 11.5% as at 31 December 2023.

ESG AND SOCIALLY RESPONSIBLE INVESTMENT

As a Board we believe that good Environmental, Social and Governance (ESG) behaviour by the companies we invest in is important to the long-term financial success of our Company and believe we should be active in encouraging the companies we invest in to adopt good standards of governance. Accordingly, the board travelled to Sao Paulo last year to meet a number of the companies we invest in to discuss their governance policies. We also travelled to Brasilia and met a number of government officials and politicians to learn more about current approaches to the rainforest and Brazil’s role as a large producer of vital food, timber, minerals and oil.

The Board receives regular reporting from the portfolio managers on ESG matters and extensive analysis of our portfolio’s ESG footprint and actively engages with the portfolio managers to discuss when significant engagement may be required with the management teams of our Company’s portfolio holdings. The portfolio managers are supported by the extensive ESG resources within BlackRock and devote a considerable amount of time to understanding the ESG risks and opportunities facing companies and industries in the portfolio. The Company does not seek to become an Article 8 or 9 company under the EU’s Sustainable Finance Disclosure Regulation legislation and does not intend to seek to have one of the 4 sustainability labels under the FCA’s Sustainability Disclosure Requirements regime. However, consideration of ESG analytics, data and insights is integrated into the investment process when weighing up the risk and reward benefits and there is more information in relation to BlackRock’s approach to ESG integration contained within the Annual Report and Financial Statements.

DISCOUNT MANAGEMENT AND NEW DISCOUNT CONTROL MECHANCISM

The Board remains committed to taking appropriate action to ensure that the Company’s shares do not trade at a significant discount to their prevailing NAV and have sought to reduce discount volatility by offering shareholders a new discount control mechanism covering the four years to 31 December 2025. This mechanism will offer shareholders a tender for 24.99% of the shares in issue excluding treasury shares (at a tender price reflecting the latest cum-income NAV less 2% and related portfolio realisation costs) in the event that the continuation vote to be put to the Company’s AGM in 2026 is approved, where either of the following conditions have been met:

(i) the annualised total NAV return of the Company does not exceed the annualised benchmark index (being the MSCI EM Latin America Index) US Dollar (net return) by more than 50 basis points over the four-year period from 1 January 2022 to 31 December 2025 (the Calculation Period); or

(ii) the average daily discount to the cum-income NAV exceeds 12% as calculated with reference to the trading of the shares over the Calculation Period.

In respect of the above conditions, the Company’s annualised total NAV return on a US Dollar basis for the year ended 31 December 2023 was +21.2%, outperforming the annualised benchmark return of +20.2% over the year by 1.0% (equivalent to 100 basis points).

The cum-income discount of the Company’s ordinary shares over the calculation period has averaged 10.8%.

For the current year the cum-income discount has ranged from 6.8% to 18.6%, ending the year on a discount of 11.5% at 31 December 2023.

The Company has not bought back any shares during the year ended 31 December 2023 and up to the date of publication of this report.

BOARD COMPOSITION

As previously advised in last year’s Annual Report, Professor Doctor did not seek re-election at the 2023 AGM. The Board wishes to thank Professor Doctor for her many years of excellent service, we wish her the best for the future.

ANNUAL GENERAL MEETING

The Company’s Annual General Meeting will be held in person at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Wednesday, 22 May 2024 at 12.00 noon. Details of the business of the meeting are set out in the Notice of Annual General Meeting contained within the Annual Report and Financial Statements.

The Board very much looks forward to meeting shareholders and answering any question you may have on the day. We hope you can attend this year’s AGM; a buffet lunch will be made available to shareholders who have attended the AGM.

OUTLOOK

Following the Board’s visit to Brazil in November 2023, it was encouraging to see the positive market sentiment for a range of the portfolio companies operating in Brazil. The Brazilian Government had embarked on some significant tax reforms which should allow businesses to operate more efficiently. The government’s continued prudent fiscal policy should enable the country’s central bank to decrease interest rates further which in turn should help stimulate the domestic economy.

The geopolitical environment is currently changing with three blocks emerging, US aligned, China aligned and the non-aligned, who are benefiting from trading with both of the other blocks. The markets in the Latin American region have managed to remain somewhat removed from the global geopolitical conflicts and so far, have been able to benefit from significant opportunities for direct investment as governments and businesses globally re-think supply chain configuration and seek to diversify risk away from countries more prone to geopolitical fallouts. The region is rich in natural resources of crude oil and natural gas and is also a major source of copper and lithium which are critical materials for the green energy transition. Not only is Latin America rich in natural resources, it is also an agricultural powerhouse. The region accounts for close to 25%1 of global exports in agricultural and fisheries products, and its significance in the global food supply chain is anticipated to increase in the future. The Board is optimistic for the outlook for Latin American equities.

Carolan Dobson

Chairman

26 March 2024

1 Source: https://www.weforum.org/agenda/2024/01/latin-america-solution-food-insecurity

INVESTMENT MANAGER’S REPORT

MARKET OVERVIEW

The MSCI EM Latin America Index gained +32.7% during 2023, significantly outperforming other Emerging Market (EM) regions. For reference, both the Asia-Pacific (APAC) and Europe, Middle East and Africa (EMEA) regions posted mid-single digit returns with the MSCI AC Asia Pacific ex Japan index up 4.6% while the MSCI Emerging Markets EMEA Index climbed 8.6% in 2023. The region also outperformed the MSCI USA Index, which was up 27.1%, and Developed Market equities, as represented by the MSCI World Index, up 24.4%. All performance figures are calculated in US Dollar terms with dividends reinvested.

All markets within our universe generated positive returns in 2023. Argentina was the standout performer, returning 65.7%, making it the best performing market globally. The market surged after libertarian Javier Milei picked up a majority of the votes, and finished ahead of Sergio Massa, the incumbent Finance Minister, in the elections that concluded on 19 November 2023. Javier Milei’s unexpected victory instilled cautious optimism in the market about the country’s potential for economic reform and the possibility of central bank orthodoxy.

In Brazil, Luiz Inacio Lula da Silva was sworn in as president on 1 January 2023. While the Brazilian market experienced some turmoil in the first half of the year, mainly due to concerns around fiscal prudency and lower activity resulting from elevated interest rates, the market bounced back in the latter half of the year, rising 32.7% in 2023. A large portion of the rally can be attributed to the much-awaited rate cuts, which finally began in August, when the central bank cut its policy rate by 50 basis points in response to falling inflation. The market continued to trend upwards in the latter half of the year, as the increased likelihood for rate cuts in the United States of America (US) should provide room for the central bank to ease more aggressively in 2024.

Mexico was yet another market that performed well in 2023, rising 40.9%. The market has benefitted from a gradual fall in inflation and resulting interest rate cut expectations. Performance had been further buoyed by a stronger than expected US market. It is also worth pointing out that the country has been and continues to be, a relative beneficiary of increased geopolitical tensions, as countries such as the US are looking to diversify their supply chains away from China. In 2023, Mexico also overtook China to become the US’ largest trading partner.

Political and social unrest has been the dominating picture of the Chilean and Peruvian markets throughout much of 2023, where both countries ended the year flat. In December, the Chilean population rejected the suggested changes to their constitution, for the second year in a row. This marks an end to the constitutional saga, for now, that has been ongoing since 2019. In Colombia, we note the improvement in the country’s external balance.

PERFORMANCE REVIEW AND POSITIONING

The Company outperformed its benchmark over the 12-month period ending 31 December 2023, returning +37.8% in US Dollar terms. Over the same time horizon, the Company’s benchmark, the MSCI Latin America Index, returned +32.7% on a net basis in US Dollar terms.

Over the period, the Company generated positive returns in a number of countries. The most notable outperformer was Mexico, driven by strong stock selection. Our positioning in Brazil was a reflection of the view that interest rates would come down, a view that played out in the latter half of the year as the central bank cut its policy rate for the first time in three years. It has since continued to cut in response to a normalisation in inflation, which has supported our domestic positioning in particular. Colombian exposure also contributed positively. On the flipside, Argentina exposure detracted on the margin. From a sector lens, the best performing sectors were industrials and materials while consumer staples and health care detracted from performance.

Our position in Vale, a Brazilian iron ore miner, was the largest contributor to relative returns over the year. Our underweight position in the company throughout the first half of 2023 was supportive to Company performance as iron ore prices declined on the back of disappointing commodity demand in China. As we became incrementally more positive on the name, and due to its relative weakness, we added to the position in the latter half of the year which proved timely. Rate sensitive names in Brazil have also done well with investment management platform XP and off-benchmark exposure to low-income homebuilder MRV Engenharia amongst the top contributors. For XP, in addition to delivering strong results, the company is also benefitting from increased flows from fixed income to equities as rates come down. In the case of MRV Engenharia, lower rates entail more affordable housing and lower costs on interest which is beneficial as this is a highly levered name. No exposure to WEG, a Brazilian electric equipment company, has also contributed to relative returns. The company has been faced with sequential growth challenges, particularly due to a solar demand slowdown in Brazil which is impacting the company’s outlook.

In Mexico, our overweight position in consumer company FEMSA, was supportive of relative returns, with a strong operating environment at its core convenience store business Oxxo. Cemex, the Mexican cement producer, was another contributor on a relative basis. Being underweight the stock helped the portfolio’s relative returns as the stock declined on fears of rising input costs. Another significant outperformer was Fibra Uno Administracion, the Mexican real estate operator. This is a stock that has continued to benefit from the nearshoring theme, i.e. increased foreign investment and demand for industrial properties. The stock also rose following the announcement of a potential IPO where the company would carve out a new vehicle of their industrial real estate assets.

Elsewhere in the region, Ecopetrol, a petroleum producer in Colombia, outperformed. Chilean lithium producer Sociedad Quimica Y Minera (SQM) was another strong performer during the last month of the year as the stock rose in anticipation of the announcement of the partnership with state entity Codelco, which has extended their mining lease in the Atacama until 2060.

While Brazil exposure has benefitted the Company more broadly, some names lagged with supermarket chain Assai being the biggest detractor over the period. The company sold off earlier in the year after its majority shareholder, Casino, showed signs of weak liquidity. This weighed on the stock after an announcement that Casino would be selling a portion of its shares. Brazilian retailers Arezzo and Grupo De Moda Soma (Soma) also hurt relative returns over the period as the retail sector was negatively impacted by the announcement of a tax reform, which could be margin dilutive for the sector. We maintain conviction in these names and believe that continued rate cuts from the central bank should be supportive for domestic consumption. Elsewhere, overweight position in Mexican silver miner MAG Silver Corp also detracted amid declining silver prices.

Over the period, we have taken advantage of the strong performance in Brazil to take profits in names that have outperformed or where our investment thesis has played out. We exited our position in Gerdau, a steel producer, and rotated this into iron ore producer Vale on a relative performance basis. We also exited XP following strong performance. As we believe continued rate cuts in Brazil should be supportive for domestic consumption, we initiated holdings in retailers Soma and Lojas Renner. For Soma specifically, we believe that mistakes made in the previous cycles have been overly penalized by the market, and we believe that their brand Farm Rio is one of the strongest brands in Brazil.

We also made some changes to our Mexican book. We exited Cemex, the Mexican cement producer, and used some of the proceeds to top up our holding in Walmart de Mexico y Centroamerica (Walmex). The latter has underperformed on cost pressures and disinflation, but we believe the negative earnings revisions are coming to an end. We also trimmed our exposure to rate sensitive bank Grupo Financiero Banorte. In Colombia, we initiated a position in bank Bancolombia on the back of cheap valuation and as the Colombian government has shown more signs of orthodoxy than initially expected. We took profits and exited Colombian oil & gas company Ecopetrol as our investment thesis has played out and as we are getting incrementally more negative on the outlook for oil prices. We also took some profits in Globant, the Argentinian IT services company, following strong performance.

We ended the year with Argentina as the largest portfolio overweight, driven by two off-benchmark holdings. Our second largest overweight position is in Panama, driven by an off-benchmark holding in the industrials sector. On the other hand, we remain underweight in Peru due to its ongoing political and economic uncertainty. We remain optimistic about the outlook for Brazil and have been selective in our positioning, with a preference for domestic businesses that will benefit more from further rate cuts.

OUTLOOK

We believe that global markets are starting to feel the impact of higher interest rates, noting slowing credit growth as evidence that a demand slowdown may be imminent in developed markets. When combined with a Chinese economy which is struggling to find its footing we find it difficult to see where a meaningful pick up in global growth could come from. On the other hand, we observe stronger fundamentals in EM, particularly in Latin America, as inflation has decreased and central banks have eased monetary policies across many of our markets. This is typically a good set up as domestic economies should see a cyclical improvement.

We are especially positive about the outlook for Brazil. We believe that the combination of a benign outlook for inflation and a relatively prudent fiscal policy by the government will enable the central bank to decrease interest rates faster than market participants currently expect. We expect further upside to the equity market in the next 12-18 months as local capital starts flowing back into the market.

We remain positive on the outlook for the Mexican economy as it is a key beneficiary of the ‘friend-shoring’ of global supply chains. Mexico remains defensive as both fiscal and the current accounts are in order. While our view remains positive, we have taken some profits after a strong relative performance, solely because we see even more upside in other Latin American markets such as Brazil. We also note that the Mexican economy will be relatively more sensitive to a potential slowdown in economic activity in the United States.

We continue to closely monitor the political and economic situation in Argentina, after libertarian Javier Milei unexpectedly won the presidential elections in November. Milei is facing a very difficult situation, with inflation at 210% year on year, foreign exchange reserves depleted and multiple economic imbalances. The country needs to go through a painful adjustment process and we worry about the hardship that this inflicts on society. We are hopeful that the country comes out stronger after the adjustment process, but we have limited exposure to the Argentinian economy for now.

We remain optimistic about the outlook for Latin America. Central banks have been proactive in increasing interest rates to help control inflation, which has fallen significantly across the region. As such we have started to see central banks beginning to lower interest rates, which should support both economic activity and asset prices. In addition, the whole region is benefitting from being relatively isolated from global geopolitical conflicts. In a world splitting into three groups: those aligned with China, those aligned with the US and the rest, the latter group which have been coined as the “Transactional 25”, are uniquely positioned to benefit from their ability to trade with both blocs. We are already seeing an increase in their share of global Foreign Direct Investment (FDI) flows, with the prime example being Mexico. Although some investor attention in 2024 may focus on the political and social challenges in countries such as Ecuador, Guyana and Panama, we maintain that the region when taken as a whole, appears to be a more attractive investment destination than many in the market currently believe.

Sam Vecht and Christoph BrinkmannBlackRock Investment Management (UK) Limited26 March 2024

TEN LARGEST INVESTMENTS

as at 31 December 2023

Together, the ten largest investments represented 55.3% of total investments of the Company’s portfolio as at 31 December 2023 (2022: 53.5%).

1 Vale (2022: 1st)MaterialsMarket value – American depositary share (ADS): US$18,331,000Share of investments: 9.6% (2022: 9.5%)is one of the world’s largest mining groups, with other businesses in logistics, energy and steelmaking. Vale is the world’s largest producer of iron ore and nickel but also operates in the coal, copper, manganese and ferro-alloys sectors.

2 Petrobrás (2022: 2nd)EnergyMarket value – American depositary receipt (ADR): US$6,666,000Market value – preference shares ADR: US$6,091,000Market value – ordinary shares: US$3,705,000Share of investments: 8.6% (2022: 7.1%)is a Brazilian integrated oil and gas group, operating in the exploration and production, refining, marketing, transportation, petrochemicals, oil product distribution, natural gas, electricity, chemical-gas and biofuel segments of the industry. The group controls significant assets across Africa, North and South America, Europe and Asia, with a majority of production based in Brazil.

3 Banco Bradesco (2022: 6th)FinancialsMarket value – ADR: US$8,726,000Market value – preference shares: US$3,276,000Share of investments: 6.2% (2022: 5.1%)is one of Brazil’s largest private sector banks. The bank divides its operations into two main areas – banking and insurance services and management of complementary private pension plans and saving bonds.

4 Walmart de México y Centroamérica (2022: 21st)Consumer StaplesMarket value – ordinary shares: US$11,317,000Share of investments: 5.9% (2022: 1.9%)is also known as Walmex, it is the Mexican and Central American Walmart division.

5 B3 (2022: 5th)FinancialsMarket value – ordinary shares: US$9,814,000Share of investments: 5.1% (2022: 5.2%)is a stock exchange located in Brazil, providing trading services in an exchange and OTC environment. B3’s scope of activities include the creation and management of trading systems, clearing, settlement, deposit and registration for the main classes of securities, from equities and corporate fixed income securities to currency derivatives, structured transactions and interest rates, and agricultural commodities. B3 also acts as a central counterparty for most of the trades carried out in its markets and offers central depository and registration services.

6 FEMSA (2022: 3rd)Consumer StaplesMarket value – ADR: US$9,126,000Share of investments: 4.8% (2022: 6.0%)is a Mexican beverages group which engages in the production, distribution, and marketing of beverages. The firm also produces, markets, sells, and distributes Coca-Cola trademark beverages, including sparkling beverages.

7 AmBev (2022: 4th)Consumer StaplesMarket value – ADR: US$6,394,000Market value – ordinary shares: US$1,542,000Share of investments: 4.2% (2022: 5.3%)is a Brazilian brewing group which engages in the production, distribution, and sale of beverages. Its products include beer, carbonated soft drinks and other non-alcoholic and non-carbonated products with operations in Brazil, Central America, the Caribbean and Canada.

8 Grupo Aeroportuario del Pacifico (2022: 14th)IndustrialsMarket value – ADS: US$7,694,000Share of investments: 4.0% (2022: 2.3%)is a Mexican airport operator headquartered in Guadalajara, Mexico. The company holds concessions to operate, maintain and develop approximately 10 international airports in the Pacific and Central regions of Mexico, and an international airport in Jamaica.

9 Itaú Unibanco (2022: 7th)FinancialsMarket value – ADR: US$7,208,000Share of investments: 3.8% (2022: 4.9%)is a Brazilian financial services group that services individual and corporate clients in Brazil and abroad. Itaú Unibanco was formed through the merger of Banco Itaú and Unibanco in 2008. It operates in the retail banking and wholesale banking segments.

10 Grupo Financiero Banorte (2022: 8th)FinancialsMarket value – ordinary shares: US$5,966,000Share of investments: 3.1% (2022: 4.8%)is a Mexican banking and financial services holding company and is one of the largest financial groups in the country. It operates as a universal bank and provides a wide array of products and services through its broker dealer, annuities and insurance companies, retirements savings funds (Afore), mutual funds, leasing and factoring company and warehousing.

All percentages reflect the value of the holding as a percentage of total investments. For this purpose, where more than one class of securities is held, these have been aggregated.

The percentages in brackets represent the value of the holding as at 31 December 2022.

PORTFOLIO OF INVESTMENTSas at 31 December 2023

All investments are in equity shares unless otherwise stated.

The total number of investments held at 31 December 2023 was 39 (2022: 40). At 31 December 2023, the Company did not hold any equity interests comprising more than 3% of any company’s share capital (2022: none).

PORTFOLIO ANALYSISas at 31 December 2023

Geographical weighting (gross market exposure) vs MSCI EM Latin America Index

Sources: BlackRock and MSCI.

Sector and geographical allocations

Source: BlackRock.

ENVIRONMENAL, SOCIAL AND GOVERANCE ISSUES AND APPROACH

The Board’s approach

Environmental, social and governance (ESG) issues can present both opportunities and risks to long-term investment performance. The securities within the Company’s investment remit are typically large producers of vital food, timber, minerals and oil supplies, and consequently face many ESG challenges and headwinds as they grapple with the impact of their operations on the environment and resources. The Board is also aware that there is significant room for improvement in terms of disclosure and adherence to global best practices for corporates throughout the Latin American region, which lags global peers when it comes to ESG best practice. These ESG issues faced by companies in the Latin American investment universe are a key focus of the Board, and it is committed to a diligent oversight of the activities of the Manager in these areas. Whilst the Company does not exclude investment in stocks on ESG criteria and has not adopted an ESG investment strategy, ESG considerations are integrated into the investment process when weighing up the risk and reward benefits of investment decisions. The Board believes that communication and engagement with portfolio companies is important and can lead to better outcomes for shareholders and the environment than merely excluding investment in certain areas.

More information on BlackRock’s approach to ESG integration, as well as activity specific to the BlackRock Latin American Investment Trust plc portfolio, is set out below. BlackRock has defined ESG integration as the practice of incorporating material ESG information and consideration of sustainability risks into investment decisions in order to enhance risk-adjusted returns. ESG integration does not change the Company’s investment objective or constrain the Investment Manager’s investable universe and does not mean that an ESG or impact focused investment strategy or any exclusionary screens have been or will be adopted by the Company. Similarly, ESG integration does not determine the extent to which the Company may be impacted by sustainability risks. More information on sustainability risks may be found in the AIFMD Fund Disclosures document of the Company available on the Company’s website at https://www.blackrock.com/uk/individual/literature/policies/itc-disclosure-blackrock-latin-america-trust-plc.pdf.

The Company does not meet the criteria for Article 8 or 9 products under the EU Sustainable Finance Disclosure Regulation (“SFDR”) and the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.

BlackRock’s approach to ESG integration

BlackRock believes that sustainability risks – including climate risk are investment risks. As a fiduciary, we manage material risks and opportunities that could impact portfolios. Sustainability can be a driver of investment risks and opportunities, and we incorporate them in our firm wide processes when they are material. This in turn (in BlackRock’s view) is likely to drive a significant reallocation of capital away from traditional carbon intensive industries over the next decade. BlackRock believes that carbon-intensive companies will play an integral role in unlocking the full potential of the energy transition, and to do this, they must be prepared to adapt, innovate and pivot their strategies towards a low carbon economy.

BlackRock incorporates into its firmwide processes relevant, financially material information, including financially material data and information related to ESG. BlackRock's investment view is that doing so can provide better risk-adjusted returns for its clients over the long term.

BlackRock has a framework for ESG integration that permits a diversity of approaches across different investment teams, strategies and particular client mandates. As with other investment risks and opportunities, the financial materiality of ESG considerations may vary by issuer, sector, product, mandate, and time horizon. As such BlackRock's ESG integration framework needs to allow for flexibility across investment teams. Depending on the investment approach, financially material ESG data or information may help inform the due diligence, portfolio or index construction, and/or monitoring processes of client portfolios, as well as BlackRock's approach to risk management.

BlackRock's ESG integration framework is built upon its history as a firm founded on the principle of thorough and thoughtful risk management. Aladdin, BlackRock's core risk management and investment technology platform, allows investors to leverage financially material ESG data or information as well as the combined experience of BlackRock's investment teams to effectively identify investment opportunities and investment risks. BlackRock's heritage in risk management combined with the strength of the Aladdin platform enables BlackRock’s approach to ESG integration.

BlackRock structures its approach to ESG integration around three main pillars: investment processes, material insights and transparency. These pillars underpin ESG integration at BlackRock, and they are supported by equipping BlackRock employees with investment relevant ESG data, tools, and education.

More information in respect of BlackRock's approach to ESG integration can be found at https://www.blackrock.com/corporate/literature/publication/blk-esg-investment-statement-web.pdf

BlackRock Latin American Investment Trust plc - Investment Stewardship Engagement with portfolio companies in the year ended 31 December 2023

Given the Board’s belief in the importance of engagement and communication with portfolio companies, they receive regular updates from the Manager in respect of activity undertaken for the year under review. The Board notes that over the year to 31 December 2023, 53 total company engagements were held with the management teams of 25 portfolio companies representing 74% of the portfolio by % of holdings at 31 December 2023. To put this into context, there were 34 companies in the BlackRock Latin American Investment Trust plc portfolio at 31 December 2023. Additional information is set out in the table below and charts contained within the Annual Report and Financial Statements as well as the key engagement themes for the meetings held in respect of the Company’s portfolio holdings.

* Calculated as the percentage of the portfolio holdings at 31 December 2023 represented by the portfolio companies that engagements were held with.

1 Most engagement conversations cover multiple topics. More detail about BIS’ engagement priorities can be found here: www.blackrock.com/corporate/literature/publication/blk-stewardship-priorities-final.pdf. The number of meetings held in respect of the Company’s portfolio holdings; at which a particular topic is discussed.

Investment Stewardship

Consistent with BlackRock’s fiduciary duty as an asset manager, BlackRock Investment Stewardship (BIS) seeks to support investee companies in their efforts to deliver long-term financial value on behalf of their clients. These clients include public and private pension plans, governments, insurance companies, endowments, universities, charities and ultimately, individual investors, among others. BIS serves as a link between BlackRock’s clients and the companies they invest in. Clients depend on BlackRock to help them meet their investment goals; the business and governance decisions that companies make may have a direct impact on BlackRock’s clients’ long-term investment outcomes and financial wellbeing.

Global Principles

The BIS Global Principles, regional voting guidelines, and engagement priorities (collectively, the ‘BIS policies’) set out the core elements of corporate governance that guide BIS’ efforts globally and within each regional market, including when engaging with companies and voting at shareholder meetings when authorised to do so on behalf of clients. Each year, BIS reviews its policies and updates them as necessary to reflect changes in market standards and regulations, insights gained over the year through third-parties and its own research, and feedback from clients and companies. BIS’ Global Principles are available on its website at https://www.blackrock.com/corporate/literature/fact-sheet/blk-responsible-investment-engprinciples-global.pdf.

Regional voting guidelines

BIS’ voting guidelines are intended to help clients and companies understand its thinking on key governance matters. They are the benchmark against which it assesses a company’s approach to corporate governance and the items on the agenda to be voted on at a shareholder meeting. BIS applies its guidelines pragmatically, taking into account a company’s unique circumstances where relevant. BlackRock informs voting decisions through research and engages as necessary. BIS reviews its voting guidelines annually and updates them as necessary to reflect changes in market standards, evolving governance practice and insights gained from engagement over the prior year. BIS’ regional voting guidelines are available on its website at www.blackrock.com/corporate/about-us/investment-stewardship#stewardship-policies.

BlackRock is committed to transparency in terms of disclosure on its stewardship activities on behalf of clients. BIS publishes its stewardship policies – such as the BIS Global Principles, regional voting guidelines and engagement priorities – to help BlackRock’s clients understand its work to advance their interests as long-term investors in public companies. Additionally, BIS publishes both annual and quarterly reports detailing its stewardship activities, as well as vote bulletins that describe its rationale for certain votes at high profile shareholder meetings. More detail in respect of BIS reporting can be found at www.blackrock.com/corporate/insights/investment-stewardship.

BlackRock’s reporting and disclosures

In terms of its own reporting, BlackRock believes that the Sustainability Accounting Standards Board provides a clear set of standards for reporting sustainability information across a wide range of issues, from labour practices to data privacy to business ethics.

For evaluating and reporting climate-related risks, as well as the related governance issues that are essential to managing them, the Task Force on Climate-related Financial Disclosures (TCFD) provides a valuable framework.

BlackRock recognises that reporting to these standards requires significant time, analysis, and effort. BlackRock’s 2022 TCFD report can be found at www.blackrock.com/corporate/literature/continuous-disclosure-and-important-information/tcfdreport-2022-blkinc.pdf.

STRATEGIC REPORT

The Directors present the Strategic Report of the Company for the year ended 31 December 2023.

Objective

The Company’s objective is to secure long-term capital growth and an attractive total return primarily through investing in quoted securities in Latin America.

Strategy, business model and investment policy

Strategy

The Company invests in accordance with the objective given above. The Board is collectively responsible to shareholders for the long-term success of the Company and is its governing body. There is a clear division of responsibility between the Board and the Manager. Matters for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing (both bank borrowings and the effect of derivatives), capital structure, governance, and appointing and monitoring of performance of service providers, including the Manager.

Business model

The Company’s business model follows that of an externally managed investment trust; therefore the Company does not have any employees and outsources its activities to third party service providers including the Manager who is the principal service provider.

In accordance with the Alternative Investment Fund Managers’ Directive (AIFMD), as implemented, retained and onshored in the UK, the Company is an Alternative Investment Fund (AIF). BlackRock Fund Managers Limited (the Manager) is the Company’s Alternative Investment Fund Manager.

The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager who in turn (with the permission of the Company) has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited (BIM (UK) or the Investment Manager). The Manager, operating under guidelines determined by the Board, has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company. The Company delegates fund accounting services to the Manager, which in turn sub-delegates these services to The Bank of New York Mellon (International) Limited. Other service providers include the Depositary, The Bank of New York Mellon (International) Limited and the Registrar, Computershare Investor Services PLC.

Details of the contractual terms with these service providers are set out in the Directors’ Report contained within the Annual Report and Financial Statements.

Our strategy is that the portfolio will be chosen from a spread of companies which are listed in, or whose main activities are in, Latin America.

As an actively managed fund, our primary aims over the medium term are significant outperformance of our benchmark index (the MSCI EM Latin America Index – net total return basis). The Investment Manager is not constrained from investing outside the index. Our portfolio and performance will diverge from the returns obtained simply by investing in the index.

Investment policy

As a closed-end company we are able to adopt a longer-term investment horizon, and therefore may, when appropriate, have a higher proportion of less liquid mid and smaller capitalisation companies than comparable open ended funds.

The portfolio is subject to a number of geographical restrictions relative to the benchmark index but the Investment Manager is not constrained from investing outside the index. For Brazil, Mexico, Chile, Argentina, Peru, Colombia and Venezuela, the portfolio weighting is limited to plus or minus 20% of the index weighting for each of those countries. For all other Latin American countries the limit is plus or minus 10% of the index weighting. Additionally, the Company may invest in the securities of quoted companies whose main activities are in Latin America but which are not established or incorporated in the region or quoted on a local exchange.

The Company’s policy is that up to 10% of the gross assets of the portfolio may be invested in unquoted securities. For the year ended 31 December 2023 and up to the date of this report, the Company did not hold any unquoted securities.

The Company will not hold more than 15% of the market capitalisation of any one company and no more than 15% of the Company’s investments will be held in any one company as at the date any such investment is made.

No more than 15% of the gross assets of the portfolio shall be invested in other UK listed investment companies (including other investment trusts).

The Company may deal in derivatives (including options, futures and forward currency transactions) for the purposes of efficient portfolio management (i.e. for the purpose of reducing, transferring or eliminating investment risk in the underlying investments of a collective investment undertaking, including any technique or instrument used to provide protection against exchange and credit risks). No more than 20% of the Company’s portfolio by value may be under option at any given time. The Company did not deal in any derivatives in the year ended 31 December 2023, nor has it entered into any derivative contracts since the year end and up to the date of this report.

The Company may underwrite or sub-underwrite any issue or offer for the sale of investments. No such commitment will be entered into if, at that time, the aggregate of such investments would exceed 10% of the net asset value of the Company or any such individual investment would exceed 3% of the net asset value of the Company.

The Company may, from time to time, use borrowings to gear its investment portfolio or in order to fund the market purchase of its own ordinary shares. Under the Company’s Articles of Association, the net borrowings of the Company may not exceed 100% of the Company’s adjusted capital and reserves (as defined in the Glossary contained within the Annual Report and Financial Statements). However, net borrowings are not expected to exceed 25% of net assets under normal circumstances. The Investment Manager may also hold cash or cash-equivalent securities when it considers it to be advantageous to do so.

The Company’s financial statements are maintained in US Dollars. Although many investments are likely to be denominated and quoted in currencies other than in US Dollars, the Company does not currently employ a hedging policy against fluctuations in exchange rates.

No material change will be made to the Company’s investment policy without shareholder approval.

Investment process

An overview of the investment process is set out below.

The Investment Manager’s main focus is to invest in securities that provide opportunities for strong capital appreciation relative to our benchmark. We aim to maintain a concentrated portfolio of high conviction investment ideas that typically consists of companies with a combination of mispriced growth potential and/or display attributes of sustained value creation that are underappreciated by the financial markets.

The Manager’s experienced research analyst team conducts on the ground research, meeting with target companies, competitors, suppliers and others in the region in order to generate investment ideas for portfolio construction. In addition, the investment team meets regularly with government officials, central bankers, industry regulators and consultants.

Final investment decisions result from a combination of bottom-up, company specific research with top-down, macro analysis.

Share rating and discount control

The Directors recognise that it is in the long term interests of shareholders that shares do not trade at a significant discount to their prevailing NAV. The Board monitors the level of the Company’s discount to NAV on an ongoing basis.

Over the year under review, the Company’s share price traded in the range of a discount of 6.8% to 18.6% and at the year end stood at a discount of 11.5%. Further details setting out how the discount or premium at which the Company’s shares trade is calculated are included in the Glossary contained within the Annual Report and Financial Statements.

A special resolution was passed at the AGM of the Company held on 22 May 2023, granting the Directors’ authority to make market purchases of the Company’s ordinary shares to be held, sold, transferred or otherwise dealt with as treasury shares or cancelled upon completion of the purchase. The Board intends to renew this authority at the AGM to be held in May 2024.

The Board adopted a new discount control mechanism, for the four year period from 1 January 2022 to 31 December 2025.

Under this new mechanism the Board undertakes to make a tender offer to shareholders for 24.99% of the issued share capital (excluding treasury shares) of the Company at a tender price reflecting the latest cum-income Net Asset Value (NAV) less 2% and related portfolio realisation costs if, over the four year period from 1 January 2022 to 31 December 2025 (the ‘Calculation Period’), either of the following conditions are met:

(i) the annualised total NAV return of the Company does not exceed the annualised benchmark index (being the MSCI EM Latin America Index) US Dollar net total return by more than 50 basis points over the Calculation Period; or

(ii) the average daily discount to the cum-income NAV exceeds 12% as calculated with reference to the trading of the ordinary shares over the Calculation Period.

The making and implementation of this tender offer will be conditional, amongst other things, upon the Company having the required shareholder authority or such shareholder authority being obtained, the Company having sufficient distributable reserves to effect the repurchase of any successfully tendered shares and, having regard to its continuing financial requirements, sufficient cash reserves to settle the relevant transactions with shareholders, the Company’s biennial continuation votes being approved at the Annual General Meetings in 2024 and 2026. The Board believes that a four year performance target enables the Manager to take a sufficiently long term approach to investing in quality companies in the region, and it believes that it is in shareholders’ interests as a whole that this time period for assessing performance be adopted.

SECTION 172 STATEMENT: PROMOTING THE SUCCESS OF BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC

The Companies (Miscellaneous Reporting) Regulations 2018 require directors to explain more fully how they have discharged their duties under Section 172(1) of the Companies Act 2006 in promoting the success of their companies for the benefit of members as a whole. This enhanced disclosure covers how the Board has engaged with and understands the views of stakeholders and how stakeholders’ needs have been taken into account, the outcome of this engagement and the impact that it has had on the Board’s decisions.

As the Company is an externally managed investment company and does not have any employees or customers, the Board considers the main stakeholders in the Company to be the shareholders, key service providers (being the Manager and Investment Manager, the Custodian, Depositary, Registrar and Broker) and investee companies. The reasons for this determination, and the Board’s overarching approach to engagement, are set out in the table below.

Stakeholders

Shareholders

Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy. The Board is focused on fostering good working relationships with shareholders and on understanding the views of shareholders in order to incorporate them into the Board’s strategy and objectives in delivering long-term growth and income.

Manager and Investment Manager

The Board’s main working relationship is with the Manager, who is responsible for the Company’s portfolio management (including asset allocation, stock and sector selection) and risk management, as well as ancillary functions such as administration, secretarial, accounting and marketing services. The Manager has sub-delegated portfolio management to the Investment Manager. Successful management of shareholders’ assets by the Investment Manager is critical for the Company to successfully deliver its investment strategy and meet its objective. The Company is also reliant on the Manager as AIFM to provide support in meeting relevant regulatory obligations under the AIFMD and other relevant legislation.

Other key service providers

In order for the Company to function as an investment trust with a listing on the premium segment of the official list of the FCA and trade on the London Stock Exchange’s (LSE) main market for listed securities, the Board relies on a diverse range of advisors for support in meeting relevant obligations and safeguarding the Company’s assets. For this reason the Board considers the Company’s Custodian, Depositary, Registrar and Broker to be stakeholders. The Board maintains regular contact with its key external providers and receives regular reporting from them through the Board and Committee meetings, as well as outside of the regular meeting cycle.

Investee companies

Portfolio holdings are ultimately shareholders’ assets, and the Board recognises the importance of good stewardship and communication with investee companies in meeting the Company’s investment objective and strategy. The Board monitors the Manager’s stewardship activities and receives regular feedback from the Manager in respect of meetings with the management of investee companies.

A summary of the key areas of engagement undertaken by the Board with its key stakeholders in the year under review and how Directors have acted upon this to promote the long-term success of the Company are set out in the table below.

Areas of Engagement

Investment mandate and objective

Issue

The Board is committed to promoting the role and success of the Company in delivering on its investment mandate to shareholders over the long term. However, the Board recognises that securities within the Company’s investment remit may involve significant additional risk due to the political volatility and environmental, social and governance concerns facing many of the countries in the Company’s investment universe. These ESG issues should be a key focus of our Manager’s research. More than ever, consideration of material ESG information and sustainability risk is an important element of the investment process and must be factored in when making investment decisions. The Board also has responsibility to shareholders to ensure that the Company’s portfolio of assets is invested in line with the stated investment objective and in a way that ensures an appropriate balance between spread of risk and portfolio returns.

Engagement

The Board believes that responsible investment and sustainability are important to the longer-term delivery of growth in capital and income and has worked very closely with the Manager throughout the year to regularly review the Company’s performance, investment strategy and underlying policies, and to understand how ESG considerations are integrated into the investment process.

While the Company has not adopted an ESG investment strategy or exclusionary screens, the Manager’s approach to the consideration of ESG factors in respect of the Company’s portfolio, as well as its engagement with investee companies to encourage the adoption of sustainable business practices which support long-term value creation, are kept under review by the Board. The Manager reports to the Board in respect of its consideration of ESG factors and how these are integrated into the investment process; a summary of BlackRock’s approach to ESG integration is set out within the Annual Report and Financial Statements.

The Board discussed ESG concerns in respect of specific portfolio companies with the Manager, including the investment rationale for holding companies with poor ESG ratings and the engagement being entered into with management teams to address the underlying issues driving these ratings.

The Company does not seek to become an Article 8 or 9 company under the EU Sustainable Finance Disclosure Regulation (EU SFDR) legislation and will not seek to have one of the 4 sustainability labels under the FCA’s Sustainability Disclosure Requirements (SDR) regime, as the Board believes engagement is likely to be more effective in Latin America than exclusion. The Investment Manager has access to a range of data sources, including principal adverse indicator (PAI) data, when making decisions on the selection of investments. However, whilst BlackRock considers ESG risks for all portfolios and these risks may coincide with environmental or social themes associated with the PAIs, unless stated otherwise in the AIFMD Disclosure Document, the Company does not commit to considering PAIs in driving the selection of its investments.

Impact

The portfolio activities undertaken by the Manager, can be found in the Investment Manager’s Report above.

Dividend target

Issue

A key element of the Board’s overall strategy to reduce the discount at which the Company’s shares trade is the Company’s dividend policy whereby the Company pays a regular quarterly dividend equivalent to 1.25% of the Company’s US Dollar NAV at the end of each calendar quarter. The Board believes this policy which produced a dividend yield of 5.1% (based on the share price of 569.84 cents per share at 31 December 2023, equivalent to the Sterling price of 447.00 pence per share translated into US cents at the rate prevailing at 31 December 2023 of US$1.27 to £1), enhances demand for the Company’s shares, which will help to narrow the Company’s discount over time. These dividends are funded out of capital reserves to the extent that current year revenue and revenue reserves are insufficient; the Board believes that this removes pressure from the investment managers to seek a higher income yield from the underlying portfolio itself which could detract from total returns but keep the dividend policy and its impact on total return under review.

Engagement

The Manager reports total return performance statistics to the Board on a regular basis, along with the portfolio yield and the impact of the dividend policy on brought forward distributable reserves.

The Board reviews the Company’s discount on a regular basis and holds regular discussions with the Manager and the Company’s broker regarding the discount level.

The Manager provides the Board with feedback and key performance statistics regarding the success of the Company’s marketing initiatives which include messaging to highlight the quarterly dividends.

The Board also reviews feedback from shareholders in respect of the level of dividend, shareholders may attend the Company’s Annual General Meeting where formal questions may be put to the Board.

Impact

Since the dividend policy was introduced in July 2018, the Company’s discount has narrowed from an average of 13.5% for the two year period preceding the introduction of the new policy on 13 March 2018 to an average of 11.3% for the period from 14 March 2018 to 31 December 2023. At 22 March 2024 the discount stood at 12.1%.

Of total dividends of US$11,797,000 paid out in the year, US$6,116,000 has been paid out of current year revenue.

The Company’s portfolio managers attend professional investor/analyst meetings and webcast presentations live to professional and private investors over the year to promote the Company and raise the profile in terms of the investment strategy, including the dividend policy.

Discount management

Issue

The Board recognises that it is in the long-term interests of shareholders that shares do not trade at a significant discount to their prevailing NAV.

Engagement

The Board has put in place a discount control mechanism covering the four years to 31 December 2025 whereby shareholders will be offered a tender for 24.99% of the shares in issue, excluding treasury shares, (at a tender price reflecting the latest cum income NAV less 2% and related portfolio realisation costs) in the event that the continuation vote for each relevant biennial period is approved (being the continuation votes at the AGMs in 2024 and 2026), where either of the following conditions have been met:

(i) the annualised total NAV return of the Company does not exceed the annualised benchmark index (being the MSCI EM Latin America Index) US Dollar net total return by more than 50 basis points over the four year period from 1 January 2022 to 31 December 2025; or

(ii) the average daily discount to the cum-income NAV exceeds 12% as calculated with reference to the trading of the shares over the Calculation Period. Further details are set out in the Strategic Report contained within the Annual Report and Financial Statements.

The Board monitors the tender trigger targets described within the Annual Report and Financial Statements on a regular basis in conjunction with the Manager. The Manager provides regular performance updates and detailed performance attribution.

Impact

The Company’s average discount for the period from 1 January 2022 to 31 December 2023 was 10.8%1 compared to the tender discount threshold of 12.0%1.

The Company’s annualised NAV performance of 21.2% for the same period outperformed the benchmark (which rose by 20.2% on an annualised basis) by 1.0% (equivalent to 100 basis points). For the tender not to be triggered, the NAV must outperform the benchmark by more than 50 basis points on an annualised basis over the four years to 31 December 2025. The Company’s discount has widened over the year under review, from 9.1% at 31 December 2022 to 11.5% at 31 December 2023.

As at 22 March 2024 the discount was 12.1%.

1 Alternative Performance Measures, see Glossary contained within the Annual Report and Financial Statements.

Service levels of third party providers

Issue

The Board acknowledges the importance of ensuring that the Company’s principal suppliers are providing a suitable level of service: including the Manager in respect of investment performance and delivering on the Company’s investment mandate; the Custodian and Depositary in respect of their duties towards safeguarding the Company’s assets; the Registrar in its maintenance of the Company’s share register and dealing with investor queries and the Company’s Broker in respect of the provision of advice and acting as a market maker for the Company’s shares.

Engagement

The Manager reports to the Board on the Company’s performance on a regular basis. The Board carries out a robust annual evaluation of the Manager’s performance, their commitment and available resources.

The Board performs an annual review of the service levels of all third party service providers and concludes on their suitability to continue in their role.

The Board receives regular updates from the AIFM, Depositary, Registrar and Broker on an ongoing basis.

The Board works closely with the Manager to gain comfort that business continuity plans continue to operate effectively for all of the Company’s service providers.

Impact

All performance evaluations were performed on a timely basis and the Board concluded that all third party service providers, including the Manager, Custodian, Depositary and Fund Accountant were operating effectively and providing a good level of service.

The Board has received updates in respect of business continuity planning from the Company’s Manager, Custodian, Depositary, Fund Accountant, Broker, Registrar and Printer, and is confident that arrangements are in place to ensure that a good level of service will be maintained.

Board composition

Issue

The Board is committed to ensuring that its own composition brings an appropriate balance of knowledge, experience and skills, and that it is compliant with best corporate governance practice under the UK Code, including guidance on tenure and the composition of the Board’s committees.

Engagement

The Board regularly reviews succession planning arrangements. The Nomination Committee has agreed the selection criteria and the method of selection, recruitment and appointment. Board diversity, including gender, is taken into account when establishing recruitment criteria. When undertaking recruitment activity, the Board will use the services of an external search consultant to identify suitable candidates.

All Directors are subject to a formal evaluation process on an annual basis (more details and the conclusions in respect of the 2023 evaluation process are contained within the Annual Report and Financial Statements). All Directors stand for re-election by shareholders annually. Shareholders may attend the AGM and raise any queries in respect of Board composition or individual Directors in person, or may contact the Company Secretary or the Chairman using the details provided within the Annual Report and Financial Statements if they wish to raise any issues.

Impact

As at the date of this report, the Board is comprised of two women and two men.

Details of each Director’s contribution to the success and promotion of the Company are set out in the Directors’ Report contained within the Annual Report and Financial Statements. The Directors are not aware of any issues that have been raised directly by shareholders in respect of Board composition in 2023. Details for the proxy voting results in favour and against individual Directors’ re-election at the 2022 AGM are given on the Company’s website at www.blackrock.com/uk/brla.

Shareholders

Issue

Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy.

Engagement

The Board is committed to maintaining open channels of communication and to engage with shareholders. The Company welcomes and encourages attendance and participation from shareholders at its Annual General Meetings. Shareholders therefore have the opportunity to meet the Directors and Investment Manager and to address questions to them directly.

The Annual Report and Half Yearly Financial Report are available on the BlackRock website and are also circulated to shareholders either in printed copy or via electronic communications. In addition, regular updates on performance, monthly factsheets, the daily NAV and other information are also published on the website at www.blackrock.com/uk/brla.

The Board also works closely with the Manager to develop the Company’s marketing strategy, with the aim of ensuring effective communication with shareholders in respect of the investment mandate and objective. Unlike trading companies, one-to-one shareholder meetings usually take the form of a meeting with the portfolio managers as opposed to members of the Board. As well as attending regular investor meetings the portfolio managers hold regular discussions with wealth management desks and offices to build on the case for, and understanding of, long-term investment opportunities in Latin America. The Manager also coordinates public relations activity, including meetings between the portfolio managers and relevant industry publications to set out their vision for the portfolio strategy and outlook for the region. The Manager releases monthly portfolio updates to the market to ensure that investors are kept up to date in respect of performance and other portfolio developments, and maintains a website on behalf of the Company that contains relevant information in respect of the Company’s investment mandate and objective. If shareholders wish to raise issues or concerns with the Board, they are welcome to do so at any time. The Chairman is available to meet directly with shareholders periodically to understand their views on governance and the Company’s performance where they wish to do so. She may be contacted via the Company Secretary whose details are contained within the Annual Report and Financial Statements.

Impact

The Board values any feedback and questions from shareholders ahead of and during Annual General Meetings in order to gain an understanding of their views and will take action when and as appropriate. Feedback and questions will also help the Company evolve its reporting, aiming to make reports more transparent and understandable.

Feedback from all substantive meetings between the Investment Manager and shareholders will be shared with the Board. The Directors will also receive updates from the Company’s broker on any feedback from shareholders, as well as share trading activity, share price performance and an update from the Investment Manager.

The portfolio managers attended a number of professional investor meetings throughout the year and held discussions with a range of wealth management desks and offices in respect of the Company during the year under review. The Manager also held group webcasts in the year to provide investors with portfolio updates and give them the opportunity to discuss any issues with the portfolio managers. 53 press articles about the Company were published in the year under review focusing on the Company’s profile and the case for long-term investment opportunities in Latin America. These included 11 pieces of national coverage, 23 pieces of intermediary coverage and 21pieces of consumer investment coverage.

Performance

Details of the Company’s performance are set out in the Chairman’s Statement above.

The Investment Manager’s Report above forms part of this Strategic Report and includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio.

Portfolio analysis

A detailed analysis of the investments and the sector and geographical allocations is provided above.

Results and dividends

The results for the Company are set out in the Income Statement below. The total gain for the year on ordinary activities, after taxation, was US$53,405,000 (2022: gain of US$13,669,000) of which the revenue profit amounted to US$8,967,000 (2022: US$13,842,000), and the capital gain amounted to US$44,438,000 (2022: capital loss of US$173,000).

Under the Company’s dividend policy, dividends are calculated based on 1.25% of the US Dollar NAV at close of business on the last working day of March, June, September and December and are paid in May, August, November and February respectively. Dividends will be financed through a combination of available net income in each financial year and revenue and capital reserves. The Company has declared interim dividends totalling 28.82 cents per share under this policy in respect of the year ended 31 December 2023 as detailed in the Annual Report and Financial Statements.

Details of this policy are also set out in the Chairman’s Statement above.

NAV, share price and index performance

At each meeting the Board reviews the detail of the performance of the portfolio as well as the net asset value and share price (total return) for the Company and compares this to the performance of other companies in the peer group of Latin American open and closed-end funds and to our benchmark.

The Board also regularly reviews a number of indices and ratios to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection.

Information on the Company’s performance is given in the performance record contained within the Annual Report and Financial Statements and the Chairman’s Statement and Investment Manager’s Report above.

Details of the Company’s discount control

The Board recognises that it is in the long-term interests of shareholders that shares do not trade at a significant discount to their prevailing NAV. The Board monitors the level of the Company’s discount to NAV on an ongoing basis and considers strategies for managing any discount. In the year to 31 December 2023, the Company’s share price to NAV traded in the range of a discount of 6.8% to 18.6% on a cum-income basis. The Board has in place a discount control mechanism whereby it will offer shareholders the ability to tender up to 24.99% of the Company’s issued share capital at the AGM in 2026 if certain performance and discount targets are not met. More details are given in the Strategic Report contained within the Annual Report and Financial Statements.

Further details setting out how the discount or premium at which the Company’s shares trade is calculated are included in the Glossary contained within the Annual Report and Financial Statements.

Ongoing charges

The ongoing charges represent the Company’s management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items expressed as a percentage of average daily net assets.

The ongoing charges are based on actual costs incurred in the year as being the best estimate of future costs. The Board reviews the ongoing charges and monitors the expenses incurred by the Company on an ongoing basis against a peer group of Latin American open and closed-end funds. A definition setting out in detail how the ongoing charges ratio is calculated is included in the Glossary contained within the Annual Report and Financial Statements.

Composition of shareholder register

The Board is mindful of the importance of a diversified shareholder register and the need to make the Company’s shares attractive to long-term investors; it is therefore the Board’s aim to increase the diversity of the shareholder register over time. The Board monitors the retail element of the register, which is defined for these purposes as wealth managers, Independent Financial Advisors (IFAs) and direct private investors. As at 31 December 2023, the Company’s share register comprised 54.6% retail investors; the Board will monitor this with the aim of growing the retail element of the register over time.

Key performance indicators

At each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in achieving its objectives. The key performance indicators (KPIs) used to measure the progress and performance of the Company over time are comparable to those reported by other investment trusts and are set out below.

The table below sets out the key KPIs for the Company. As indicated in footnote 2 to the table, some of these KPIs fall within the definition of ‘Alternative Performance Measures’ (APMs) under guidance issued by the European Securities and Markets Authority and additional information explaining how these are calculated is set out in the Glossary contained within the Annual Report and Financial Statements.

1 Calculated in US Dollar terms with dividends reinvested.

2 Alternative Performance Measures, see Glossary contained within the Annual Report and Financial Statements.

3 Ongoing charges represent the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items as a % of average daily net assets.

4 Source: Richard Davies Investor Relations.

PRINCIPAL RISKS

The Company is exposed to a variety of risks and uncertainties and the key risks are set out below. The Board has put in place a robust process to identify, assess and monitor the principal and emerging risks. A core element of this process is the Company’s risk register. This identifies the risks facing the Company and assesses the likelihood and potential impact of each risk and the quality of controls operating to mitigate it. A residual risk rating is then calculated for each risk based on the outcome of the assessment. This approach allows the effect of any mitigating procedures to be reflected in the final assessment.

The risk register is regularly reviewed and the risks reassessed. The risk environment in which the Company operates is also monitored and regularly appraised. New risks are also added to the register as they are identified which ensures that the document continues to be an effective risk management tool. The risk that unforeseen or unprecedented events including (but not limited to) heightened geo-political tensions such as the conflicts in Russia-Ukraine and the Middle East, high inflation and the current cost of living crisis has had a significant impact on global markets. The Board has taken into consideration the risks posed to the Company by the crisis and incorporated these into the Company’s risk register.

The risk register, its method of preparation and the operation of key controls in the Manager’s and third party service providers’ systems of internal control are reviewed on a regular basis by the Audit Committee in order to gain a more comprehensive understanding of the Manager’s and other third party service providers’ risk management processes and how these apply to the Company’s business. BlackRock’s internal audit department provides an annual presentation to the Audit Committee chairmen of the BlackRock investment trusts setting out the results of testing performed in relation to BlackRock’s internal control processes. Where produced, the Audit Committee also reviews Service Organisation Control (SOC 1) reports from the Company’s service providers.

As required by the UK Corporate Governance Code, the Board has undertaken a robust assessment of both the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. Those principal risks have been described in the table that follows, together with an explanation of how they are managed and mitigated. The Board will continue to assess these risks on an ongoing basis. Emerging risks are considered by the Board as they come into view and are incorporated into the existing review of the Company’s risk register. They were also considered as part of the annual evaluation process. Additionally, the Manager considers emerging risks in numerous forums and the Risk and Quantitative Analysis team produces an annual risk survey. Any material risks of relevance to the Company identified through the annual risk survey will be communicated to the Board.

The Board will continue to assess these risks on an ongoing basis. In relation to the 2018 UK Corporate Governance Code, the Board is confident that the procedures that the Company has put in place are sufficient to ensure that the necessary monitoring of risks and controls has been carried out throughout the reporting period.

The current risk register includes a number of risks which have been categorised as follows:

• Counterparty;

• Investment performance;

• Income/dividend;

• Legal and regulatory compliance;

• Operational;

• Market;

• Financial; and

• Marketing.

The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors, are set out in the following table.

Counterparty

Principal Risk

Potential loss that the Company could incur if a counterparty is unable (or unwilling) to perform on its commitments.

Mitigation/Control

Due diligence is undertaken before contracts are entered into and exposures are diversified across a number of counterparties. The Board reviews the controls put in place by the Investment Manager to monitor and to minimise counterparty exposure, which include intra-day monitoring of exposures to ensure that these are within set limits.

The Depositary is liable for restitution for the loss of financial instruments held in custody unless able to demonstrate the loss was a result of an event beyond its reasonable control.

Investment performance

Principal Risk

Returns achieved are reliant primarily upon the performance of the portfolio.

The Board is responsible for:

• deciding the investment strategy to fulfil the Company’s objective; and

• monitoring the performance of the Investment Manager and the implementation of the investment strategy.

An inappropriate investment strategy may lead to:

• poor performance compared to the benchmark index and the Company’s peer group;

• a widening discount to NAV;

• a reduction or permanent loss of capital; and

• dissatisfied shareholders and reputational damage.

The Board is also cognisant of the long term risk to performance from inadequate attention to ESG issues, and in particular the impact of Climate Change. More detail in respect of these risks can be found in the AIFMD Fund Disclosures document available on the Company’s website at https://www.blackrock.com/uk/individual/literature/policies/itc-disclosure-blackrock-latin-america-trust-plc.pdf.

Mitigation/Control

To manage this risk the Board:

• regularly reviews the Company’s investment mandate and long-term strategy;

• has set investment restrictions and guidelines which the Investment Manager monitors and regularly reports on;

• receives from the Investment Manager a regular explanation of stock selection decisions, portfolio exposure, gearing and any changes in gearing and the rationale for the composition of the investment portfolio; and

• monitors the maintenance of an adequate spread of investments in order to minimise the risks associated with factors specific to particular sectors, based on the diversification requirements inherent in the investment policy.

Consideration of material ESG information and sustainability risks is integrated in the Manager’s investment process, as set out within the Annual Report and Financial Statements. This is monitored by the Board.

Income/dividend

Principal Risk

The Company’s dividend policy is to pay dividends based on 1.25% of the US Dollar net asset value at each quarter end. Under this policy, a portion of the dividend is likely to be paid out of capital reserves, and over time this might erode the capital base of the Company, with a consequential impact on longer-term total returns. The rate at which this may occur and the degree to which dividends are funded from capital are also dependent upon the level of dividends and other income earned from the portfolio. Income returns from the portfolio are dependent, among other things, upon the Company successfully pursuing its investment policy.

Any change in the tax treatment of dividends or interest received by the Company, including as a result of withholding taxes or exchange controls imposed by jurisdictions in which the Company invests, may reduce the level of dividends received by shareholders.

Mitigation/Control

The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each meeting.

The Company has the ability to make dividend distributions out of capital reserves as well as revenue reserves to support any dividend target. These reserves totalled US$158.8 million at 31 December 2023.

The Board is mindful of the balance of shareholder returns between income and capital and monitors the impact of the Company’s dividend on the Company’s capital base and the impact over time on total return.

Any changes to the Company’s dividend policy are communicated to the market on a timely basis and shareholder approval will be sought for significant changes.

Legal and regulatory compliance

Principal Risk

The Company has been approved by HM Revenue & Customs as an investment trust, subject to continuing to meet the relevant eligibility conditions and operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments.

Any breach of the relevant eligibility conditions could lead to the Company losing investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. In such event the investment returns of the Company may be adversely affected.

Any serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010.

Amongst other relevant laws and regulations, the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive, the UK Listing Rules, international sanctions and the FCA’s Disclosure Guidance and Transparency Rules.

Mitigation/Control

The Investment Manager monitors investment movements and the amount of proposed dividends, if any, to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached. The results are reported to the Board at each meeting.

Compliance with the accounting rules affecting investment trusts is carefully and regularly monitored. The Company Secretary and the Company’s professional advisers provide regular reports to the Board in respect of compliance with all applicable rules and regulations.

Following authorisation under the Alternative Investment Fund Managers’ Directive (AIFMD), the Company and its appointed Alternative Investment Fund Manager (AIFM) are subject to the risks that the requirements are not correctly complied with. The Board and the AIFM also monitor changes in government policy and legislation which may have an impact on the Company.

The Market Abuse Regulation came into force on 3 July 2016. The Board takes steps to ensure that individual Directors (and their Persons Closely Associated) are aware of their obligations under the regulation and has updated internal processes which seek to ensure the risk of non-compliance is effectively mitigated.

Operational

Principal Risk

In common with most other investment trust companies, the Company has no employees. The Company therefore relies on the services provided by third parties. Accordingly, it is dependent on the control systems of the Manager and The Bank of New York Mellon (International) Limited (the Custodian, Depositary and Fund Accountant) who maintain the Company’s assets, dealing procedures and accounting records. The Company’s share register is maintained by the Registrar, Computershare Investor Services PLC. The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of these other third party service providers. There is a risk that a major disaster, such as floods, fire, a global pandemic or terrorist activity, renders the Company’s service providers unable to conduct business at normal operating capacity and effectiveness.

Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records could prevent the accurate reporting and monitoring of the Company’s financial position.

Mitigation/Control

Due diligence is undertaken before contracts are entered into with third party service providers. Thereafter, the performance of the provider is subject to regular review and reported to the Board.

Most third party service providers produce Service Organisation Control (SOC 1) reports to provide assurance regarding the effective operation of internal controls as reported on by their reporting accountants. These reports are provided to the Audit Committee for their review.

The Company’s assets/financial instruments held in custody are subject to a strict liability regime and in the event of a loss of such financial assets held in custody, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control.

The Board reviews the overall performance of the Manager, Investment Manager and all other third party service providers and compliance with the Investment Management Agreement on a regular basis. The Board also considers the business continuity arrangements of the Company’s key service providers on an ongoing basis and reviews these as part of their review of the Company’s risk register. The Board has received updates from key service providers (the Manager, the Depositary, the Custodian, the Fund Accountant, the Broker, the Registrar and the Printer) confirming that appropriate business continuity arrangements are in place.

Market

Principal Risk

Market risk arises from volatility in the prices of the Company’s investments. It represents the potential loss the Company might suffer through holding investments in the face of negative market movements. There may be exposure to significant economic, geo-political and currency risks due to the location of the operation of the businesses in which the Company may invest, or as a result of a global economic crisis such as the Russia-Ukraine and Middle East conflicts. Shares in businesses in which the Company invests can prove volatile and this may be reflected in the Company’s share price. Market risk includes the potential impact of events which are outside the Company’s control, including (but not limited to) heightened geo-political tensions and military conflict, a global pandemic and high inflation. The Company may also invest in smaller capitalisation companies or in the securities markets of developing countries which are not as large as the more established securities markets and have substantially less trading volume, which may result in a lack of liquidity and higher price volatility.

Corruption also remains a significant issue across the Latin American investment universe and the effects of corruption could have a material adverse effect on the Company’s performance. Accounting, auditing and financial reporting standards and practices and disclosure requirements applicable to many companies in Latin American countries may be less rigorous than in other markets. As a result, there may be less information available publicly to investors in these securities, and such information as is available is often less reliable.

Mitigation/Control

The Board considers asset allocation, stock selection, unquoted investments, if any, and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager.

The Board monitors the implementation and results of the investment process with the Investment Manager.

The Board also recognises the benefits of a closed-end fund structure in extremely volatile markets such as those experienced during the Russia-Ukraine and Middle East conflicts. Unlike open ended counterparts, closed-end funds are not obliged to sell down portfolio holdings at low valuations to meet liquidity requirements for redemptions. During times of elevated volatility in markets following the Russian invasion of Ukraine and market stress, the ability of a closed-end fund structure to remain invested for the long term enables the portfolio managers to adhere to disciplined fundamental analysis from a bottom-up perspective and be ready to respond to dislocations in the market as opportunities present themselves.

Financial

Principal Risk

The Company’s investment activities expose it to a variety of financial risks that include interest rate, currency and liquidity risk.

Mitigation/Control

Details of these risks are disclosed in note 16 to the financial statements, together with a summary of the policies for managing these risks.

Marketing

Principal Risk

Marketing efforts are inadequate or do not comply with relevant regulatory requirements, and fail to communicate adequately with shareholders or reach out to potential new shareholders, resulting in reduced demand for the Company’s shares and a widening discount.

Mitigation/Control

The Board focuses significant time on communicating directly with the major shareholders and reviewing marketing strategy and initiatives.

All investment trust marketing documents are subject to appropriate review and authorisation.

VIABILITY STATEMENT

In accordance with provision 31 of the 2018 UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months referred to by the ‘Going Concern’ guidelines. The Board recognises that it is obliged to propose a biennial continuation vote, with the next vote at the AGM to be held in May 2024. The outcome of these events is unknown at the present time. In addition, the Board is cognisant of the uncertainty surrounding the potential duration of the Russia-Ukraine conflict and its impact on the global economy and the prospects for many of the Company’s portfolio holdings. Notwithstanding these uncertainties, given the factors stated below, the Board expects the Company to continue for the foreseeable future and has therefore conducted this review for the period up to the AGM in 2027, being a period of three years from the date of approval of this report. The Board considers three years to be an appropriate time horizon, being a reasonable time horizon to assess potential investments and the period being used to assess performance for the Company’s Discount Control mechanism (as set out in more detail within the Strategic Report contained within the Annual Report and Financial Statements).

In choosing this period for its assessment of the viability of the Company the Directors have considered the following matters:

• the Company’s business model should remain attractive for much longer than the period up to the AGM in 2027, unless there is a significant economic or regulatory change;

• the ongoing relevance of the Company’s investment objective, business model and investment policy in the current environment (in particular the Company’s closed-end structure which provides intraday liquidity to investors and the ability for the portfolio managers to invest over a longer-term time horizon than many open ended peers). This longer-term investment horizon is well-suited to Latin America as the volatility of this region can make short term investing more challenging. The Company is the only investment trust with exposure to the Latin American region;

• the Board keeps the Company’s principal risks and uncertainties as set out below under review, and is confident that the Company has appropriate controls and processes in place to manage these and to maintain its operating model, even given the global economic challenges posed by the Russia-Ukraine and Middle East conflicts, the impact of climate change on portfolio companies and the current climate of heightened geo-political risk;

• if the tender offer was to be implemented in 2026 was fully subscribed, the Directors consider that the Company will still retain sufficient assets and liquidity to remain viable and to continue to operate in accordance with its business model and investment mandate; and

• the Board has reviewed the operational resilience of the Company and its key service providers (the Manager, Depositary, Custodian, Fund Accountant, Registrar and Broker) and have concluded that all service providers are able to provide a good level of service for the foreseeable future.

The Directors have also reviewed the assumptions and considerations underpinning the Company’s existing going concern assertion which are based on:

• processes for monitoring costs;

• key financial ratios;

• evaluation of risk management and controls;

• portfolio risk profile;

• share price discount to NAV;

• gearing; and

• counterparty exposure and liquidity risk.

Based on the results of their analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.

Future prospects

The Board’s main focus is the achievement of capital growth and an attractive total return. The future of the Company is dependent upon the success of the investment strategy. The outlook for the Company is discussed in both the Chairman’s Statement and the Investment Manager’s Report.

Social, community and human rights issues

As an investment trust with no employees, the Company has no direct social or community responsibilities or impact on the environment. However, the Company believes that it is in shareholders’ interests to consider human rights issues, environmental, social and governance factors when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out within the Annual Report and Financial Statements.

Modern Slavery Act

As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. In any event, the Board considers the Company’s supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

Directors, gender representation and employees

The Directors of the Company on 31 December 2023, all of whom held office throughout the year, are set out in the governance structure and Directors’ biographies contained within the Annual Report and Financial Statements.

The Board’s aim regarding diversity, including age, gender, educational and professional background and other broader characteristics of diversity, is to take these into account during the recruitment and appointment process. However, the Board is committed to an objective of appointing the most appropriate candidate, regardless of gender or other forms of diversity, and therefore no targets have been set against which to report.

The Parker Review in respect of board diversity and the recent changes to the FCA’s Listing Rules set new diversity targets and associated disclosure requirements for UK companies listed on the premium and standard segment of the London Stock Exchange. Listing Rule 9.8.6R (9) requires listed companies to include a statement in their annual reports and accounts in respect of certain targets on board diversity, or if those new targets have not been met to disclose the reasons for this. This new requirement applies to accounting periods commencing on or after 1 April 2022. However, the Board did meet the diversity targets from 17 November 2009 up until Professor Mahrukh Doctor resigned from the Board on the 31 March 2023. The Board has reduced in size to four directors, in an effort to reduce costs, as the size of the Company has fallen post the tender offer, which was completed in May 2022. The Board will consider board diversity when seeking to appoint a new director in the future.

Further information on the composition and diversity of the Board can be found in the disclosure table which follows below:

1 A senior position is defined as the role of Chairman, Audit Committee Chairman or Senior Independent Director.

2 Categorisation of ethnicity is stated in accordance with the Office of National Statistics classification.

The Company does not have any employees, therefore there are no disclosures to be made in that respect.

The Chairman’s Statement above, along with the Investment Manager’s Report and portfolio analysis above, form part of the Strategic Report.

The Strategic Report was approved by the Board at its meeting on 26 March 2024.

By order of the BoardGRAHAM VENABLESFor and on behalf of BlackRock Investment Management (UK) LimitedCompany Secretary

26 March 2024

TRANSACTIONS WITH THE AIFM AND THE INVESTMENT MANAGER

BlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in the Directors’ Report contained within the Annual Report and Financial Statements.

The investment management fee is levied quarterly, based on 0.80% per annum of the Company’s daily net asset value. The investment management fee due for the year ended 31 December 2023 amounted to US$1,358,000 (2022: US$1,332,000), as disclosed in note 4 to the Financial Statements (below). At the year end, an amount of US$383,000 was outstanding in respect of these fees (2022: US$588,000).

In addition to the above services, BIM (UK) has provided the Company with marketing services. The total fees paid or payable for these services for the year ended 31 December 2023 amounted to US$104,000 excluding VAT (2022: US$83,000). Marketing fees of US$86,000 (2022: US$81,000) were outstanding at 31 December 2023.

During the year, the Manager pays the amounts due to the Directors. These fees are then reimbursed by the Company for the amounts paid on its behalf. As at 31 December 2023, an amount of US$213,000 (2022: US$110,000) was payable to the Manager in respect of Directors’ fees.

The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in Delaware, USA.

RELATED PARTY DISCLOSURE

At the date of this report, the Board consists of four Non-executive Directors, all of whom are considered to be independent of the Manager by the Board.

Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report contained within the Annual Report and Financial Statements. At 31 December 2023, an amount of US$17,000 (2022: US$18,000) was outstanding in respect of Directors’ fees.

The Board currently consists of four non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. For the year ended 31 December 2023, the Chairman received an annual fee of £50,200, the Chairman of the Audit Committee received an annual fee of £38,600 and each other Director received an annual fee of £34,300. This excludes expenses paid to each of the Directors which are set out in the Directors' Remuneration Report contained within the annual report and financial statements. For the year ending 31 December 2024, the Chairman will receive an annual fee of £52,800, the Chairman of the Audit Committee will receive an annual fee of £40,600 and each other Director received an annual fee of £36,100.All current members of the Board hold ordinary shares in the Company. Carolan Dobson holds 6,842 ordinary shares, Nigel Webber holds 5,000 ordinary shares, Craig Cleland holds 12,000 ordinary shares and Laurie Meister holds 2,915 ordinary shares.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable United Kingdom law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under these laws the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of each financial year and of the profit or loss of the Company for that year.

In preparing those financial statements, the Directors are required to:

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing the Strategic Report, Directors’ Report, the Directors’ Remuneration Report, the Corporate Governance Statement and the Report of the Audit Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules.

The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Company’s corporate and financial information included on the Investment Manager’s website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are listed within the Annual Report and Financial Statements, confirm to the best of their knowledge that:

The 2018 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit Committee advise on whether it considers that the Annual Report and Financial Statements fulfil these requirements. The process by which the Committee has reached these conclusions is set out in the Audit Committee’s report contained within the Annual Report and Financial Statements. As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 31 December 2023, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.

For and on behalf of the BoardCAROLAN DOBSONChairman26 March 2024

INCOME STATEMENT

for the year ended 31 December 2023

The total columns of this statement represent the Company’s profit and loss account. The supplementary revenue and capital accounts are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. All income is attributable to the equity holders of the Company.

The net profit/(loss) for the year disclosed above represents the Company’s total comprehensive income/(loss).

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2023